Alaskans' pain set stage for Gulf spill victims' gain

Updated 3:47 pm, Sunday, October 14, 2012

Photo: John Gaps III

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Congress passed the Oil Pollution Act as an amendment to the Clean Water Act after the destruction from the Exxon Valdez running aground in 1989 and spilling thousands of barrels of oil in Prince William Sound.

Congress passed the Oil Pollution Act as an amendment to the Clean Water Act after the destruction from the Exxon Valdez running aground in 1989 and spilling thousands of barrels of oil in Prince William Sound.

Photo: John Gaps III

Alaskans' pain set stage for Gulf spill victims' gain

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As a federal judge considers whether to approve a huge civil settlement in the 2010 oil spill, thousands of Gulf Coast residents owe their day in court to a law that arose from the Exxon Valdez disaster 23 years ago.

The litigation over the spill from BP's Macondo well is the biggest test so far of the Oil Pollution Act of 1990, and economic victims of the Gulf spill likely will fare better than those who suffered from the 1989 tanker accident in Alaska.

While some plaintiffs have expressed frustration that the settlement process has taken two years, legal experts say that one of the biggest benefits of the oil pollution legislation has been how it has helped move along the resolution process, sidestepping much of the legal fighting that became the heart of the Valdez negotiations.

Under the act, liability for an oil spill falls to the operator of a project - BP and co- owners of the Macondo well, in the case of the Gulf spill.

"With Exxon Valdez, there were decades of litigation about fault and responsibility, but the Oil Pollution Act makes it very simple," said Martin Davies, a maritime law professor at Tulane University.

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Speaking of oil operators, he said, "Under OPA, you are strictly liable, whether or not you were at fault and you have just got to pay, which has made it really simple and has been very effective. It is why BP has been paying up since day one."

Congress passed the Oil Pollution Act in 1990 in response to the environmental and economic devastation when the Exxon Valdez tanker ran aground the year before and spilled 257,000 barrels of crude into the pristine waters of Alaska's Prince William Sound.

Maritime law then protected those directly injured by the spill, but not those who lost their livelihoods in its aftermath - leaving many Alaska businesses and individuals unable to collect damages.

"We had nothing but old maritime law, and Exxon denied responsibility for most of the damages," said David Oesting, a lawyer who represented many of the fishermen in the Exxon Valdez case. "They contended that they were trumped up and phony."

Those indirectly hurt

Oesting said that in the Valdez case, many of the businesses that were indirectly hurt by the spill - such as boat repair yards, pipe stack supply companies, cold storage business - were excluded because they couldn't prove a direct connection between the spill and their losses.

"They didn't touch the fish," Oesting said. "They didn't touch the fish, so they didn't have a claim, because the economic loss was very narrowly constrained to the distribution of the fish, not to the people who worked collaterally in the direct chain of fish processing."

Congress passed the Oil Pollution Act as an amendment to the Clean Water Act.

In addition to explicitly making operators liable, it allowed for damage claims "due to the injury, destruction or loss of real property, personal property or natural resources."

The phrase "due to" suggests that some kind of relationship must exist between the accident and the damage suffered. That has brought legions of lawyers into the cases, as they try to sort out the boundaries of BP's economic responsibility.

"The 'due to' clause of OPA is an additional layer of legal proof related to connecting someone's economic losses to the oil spill damage," said Chris Dean, a lawyer for several business spill claimants. "It is a big tool for courts to separate the Moe, Larry and Curly claimants from those with legitimate claims."

Still, that expansion of possible economic claims has added thousands of plaintiffs in the Gulf Coast litigation.

While the strict liabil­ity provisions of the Oil Pollution Act mean that plaintiffs don't have to argue in court about BP's responsibility, the law is not explicit on how the losses should be measured, and that has been the focus of many of the hundreds of lawsuits before U.S. District Judge Carl Barbier of New Orleans, who is overseeing the mass of litigation related to the spill.

He has set a hearing for Nov. 8 to consider the fairness of a proposed settlement between BP and a steering committee representing private individuals and businesses claiming health or economic loss.

"The big fight is when you have losses, how much are your losses and what are you going to use for comparison?" said Brent Coon, a Houston-based attorney representing several thousand claimants. "Were you just in a big area of growth? Was it a hot or a rainy season? There are many things that can impact profits and losses in a spill."

Tough to predict

While the calculation of past losses has made for onerous paperwork for many businesses, trying to predict what future losses will be - especially for the fishermen - is even more challenging, requiring assumptions for which there is no precedent.

"Each claimant has to convince someone how much that loss was and how much it will continue to be into the future," Coon said. "There is nothing in the rules that says which documents you use and what you can and cannot consider. It is hard to say what is or is not a compensable loss."

Barbier has made some initial decisions on previously untested issues of how the law should be interpreted in terms of its economic reach.

In September, for example, he dismissed several cases that had argued that the law should extend to the damaged reputation of BP-branded gas stations, or to claims by landowners who haven't attempted to sell their property that its value is diminished.

"OPA is not without limits," Barbier wrote, noting that the law doesn't compensate "this type of emotional, non-pecuniary damage."

A difference in views

University of Texas admiralty law professor David Robertson, whom Barbier quoted in his decision, said the legal community differs on how broadly OPA should be interpreted in the range of claims it covers. The most conservative view would only provide compensation to those with a recognizable right to the damaged natural resources, while others have argued for a looser associated cause between the accident and the economic damage.

"It has certainly broadened the range of people who have the right to show up in court and make a plausible complaint and has caused BP to settle with thousands of people who wouldn't have had a claim prior to OPA," Robertson said. "We don't know how successful it has been for many of its broader aims, like discouraging the kinds of actions that lead to a tragic accident in the first place."